Market Trends & Outlook

Since 2021, as the impact of an economic shutdown collided with $5 Trillion in artificial, stimulus-driven demand, inflation has consumed everything from headlines to financial markets and the Fed’s monetary policy. With employment back to pre-pandemic levels, the monetary impulse has reversed, the supply-demand imbalance has normalized, and inflation is falling. Changes to the money supply precede changes in inflation by about 16 months.

Since 2021, as the impact of an economic shutdown collided with $5 Trillion in artificial, stimulus-driven demand, inflation has consumed everything from headlines to financial markets and the Fed’s monetary policy. With employment back to pre-pandemic levels, the monetary impulse has reversed, the supply-demand imbalance has normalized, and inflation is falling. Changes to the money supply precede changes in inflation by about 16 months.

Recession odds have climbed considerably since Jerome Powell’s testimony before Congress and the latest FOMC meeting. However, the recent failures of Silicon Valley Bank (SVB) and Credit Suisse (CS), as higher rates impact regional bank liquidity, also added to the risks.

Recession odds have climbed considerably since Jerome Powell’s testimony before Congress and the latest FOMC meeting. However, the recent failures of Silicon Valley Bank (SVB) and Credit Suisse (CS), as higher rates impact regional bank liquidity, also added to the risks.

In this edition of the Catalyst Funds and Rational Funds Quarterly Outlook, portfolio managers from across our network of sub-advisors provide their insights into the direction of the investment universe. In addition to a macroeconomic overview, we also include their thoughts on equities, bonds, commodities, and a special section on currencies.

In this edition of the Catalyst Funds and Rational Funds Quarterly Outlook, portfolio managers from across our network of sub-advisors provide their insights into the direction of the investment universe. In addition to a macroeconomic overview, we also include their thoughts on equities, bonds, commodities, and a special section on currencies.

The market bottomed last October despite ongoing concerns about inflation, higher rates, recessionary risks, and a banking crisis. While the media headlines and youtube podcasts are filled with “crisis” headlines, as noted in “Analysts Raise Estimates,” expectations for growth and earnings are rising.

The broad securities markets enjoyed a strong March, with equity and fixed income markets alike delivering healthy returns. The Core Large Cap Equity category delivered a 7.3% return for the month, powered by a rebound in beaten-down large-cap technology stocks. Meanwhile, the Core Fixed Income category generated a 2.6% return in March, benefitting from reduced inflation expectations and declining interest rates.